Starting a business is one of the most exciting things you can do. It’s a leap into the unknown, no matter how much experience or knowledge you have. It’s not only a new business, it’s a whole new world. One where you’re likely to meet plenty of influential people along the way, learn plenty of lessons (usually the hard way) and hopefully have plenty of success too. It’s a big risk but you know that feeling of achievement is far superior when the work you’re producing is for your own company. Still, since it is a risk you need to follow a proper plan and ensure you have completed everything you need to, especially from a legal standpoint before you launch.
When To Launch A Start-Up
Launching a business is rarely an actual moment. Generally, there’s no countdown or big green launch button. Of course, if you’re opening a store then you might consider your first opening the launch. Or, if you’re selling a product then the day it first becomes available to purchase. In these cases though, and many others, you’ve been working in the business for some time already. Developing products or services, writing business plans, building relationships with potential customers/clients and suppliers, and creating the brand and marketing materials. Therefore, it can be difficult to know when to get all your business registrations, documents and contracts in place. As early as possible is my advice.
Not only is it important to protect your business straight away (many great ideas are copied before they’re even born) but also, you don’t know how busy you might get in the run-up to your launch and it’s easy for such things to slip down (then fall off) the to-do list.
As a guide, you should have all your registrations and business contracts in place before you:
Promote your business (especially if it may be subject to copying!)
Launch your website
Apply for investment or fundraise via any means
Start working with clients or selling to customers
Hiring (this is an essential one)
So, what is on the legal checklist for launching a start-up in the UK? Let’s look at the basic must-haves first:
Registering A Start-Up In The UK
Registering a business is fairly straightforward so there’s no reason not to do this strategy away. Besides, once you’ve registered your business officially it begins to feel real. You’ll have to decide whether you want to become a limited company or operate as a sole trader.
Should I Operate As A Sole Trader?
A sole trader is basically a self-employed person making their own income. They are responsible for reporting their profits and expenses to HMRC by submitting a self-assessment. They may then be required to pay taxes at the end of the year. Being a sole trader is the simplest course of action with the least paperwork. Operating as a sole trader though, is not usually appropriate for businesses who intend to hire staff, acquire investors or who are entering into business partnerships. There is much autonomy in being a sole trader as you can direct business profits as you wish and won’t have to make anything public. However, you will also be personally liable for any and all business debts - which could put your personal assets (including your home) at risk if you are sued.
To register as self-employed, head to Gov.co.uk.
Should I Register As A Limited Company?
To register as a limited company you will need to provide quite a few details to Companies House. These details will be available publicly but comprise information most businesses are happy to share. Tax returns for limited companies are a little more complex and there is more paperwork involved generally. In fact, many Ltd business owners find themselves using an accountant to make the process easier (and sometimes save them money in the long run too). This route is suited to companies who intend to hire, form partnerships and raise investment. It is essential if you have shareholders, even if those shareholders are relatives or friends. Some businesses also like to use their accountants to carry out some of the company secretarial work (like filing the annual confirmation statement) and perhaps being the registered office address (so that your home address can remain private - especially if you are planning to work from home).
To register a limited company, head to Companies House.
Why Registering Your Company Is Important
Even if you don’t make a profit in your first year, or even if you don’t start trading at all, you need to register your company. Sole traders need to let HMRC know they’re self-employed and company owners setting up a limited company need to register for tax purposes too. This is a legal requirement of any trader, even if you’re not yet making a profit. Apart from the fact that suppliers, clients, investors and companies may need to check your registration to operate or trade with you.
Protecting Your Assets - Trademarking, Copyright, Patents And Registrations
Not every business will need to register a trademark or apply for a patent. In fact, very few need to in the first year or two. However, as far as possible, you’ll want to protect your company name and brand. The good news is that in the UK copyright is automatically applied to anything you create that is unique in some way. This includes your company name, logo, website design, etc. This also means though that before deciding on a name for your business or product, you need to make sure it’s not already taken.
Your Business Name And Domain
In terms of company names, the rules are fairly straightforward. You can have a similar company name as another business so long as you aren’t in the same, or closely related, sector. Still, if any other business has the same or a very similar name, you may wish to consider obstacles this might create for you. Such as, what will your domain address be? Might customers mistakenly be directed to the wrong company?
Companies House has a company name availability checker where you can see if anyone else has the same of a similar business name registered. However, some company owners may be sole traders so it’s also worth doing an online search and seeing what else comes up when you search your desired company name.
These days, online presence is essential. You’re going to need a website and so you’ll need a domain name. One thing you’ll want to do before committing to a company name is to check a website address that includes that company name is available to purchase. If it is, I advise you to claim it straight away. There are too many stories of start-up founders checking domain name availability only to return later and find that the name has then been claimed. There’s a good chance this is intentional. Buying up desirable domain names to sell them on at an inflated price is fairly commonplace and these opportunists tend to target recently searched-for domain names. Therefore, claim your domain name quickly, even if you aren’t anywhere near launching a website. Owning it will protect it. Additionally, no one is going to launch a business with the same name as yours if the domain name isn’t available. On this note, it is also wise to buy up very similar domains as this makes it harder for copycat scammers to impersonate your company.
Trade marking
A trade mark is a badge of origin. It may be a company logo or another design, slogan or approval stamp you wish to represent your brand. Not only does it make your products and services identifiable, but it makes copying them illegal. Brand logos, such as McDonald's, Apple and Mercedes are likely to be trade marked which prevents any other person or business from using their logo or anything too similar.
Organisations may also use trade marks to inform customers that a product or service meets certain criteria. For instance, on food products, you might see the Red Tractor logo for assured food standards. The FSC logo also lets consumers know a company has made its processes environmentally friendly enough to satisfy the Forest Stewardship Council.
Trade marking can be a difficult process and it can be costly if your trade mark is not approved. Aubergine offer (1) a trade mark checking service; (2) advice on how to register your mark; and (3) we can also manage trade mark applications on your behalf. We are passionate about trade marks and love to see our clients receive their trade mark certificates. Take a look at our other blog on trade marks for more information. Do get in touch if we can help you or if you have any questions.
Patents For Start-Ups
Applying for a patent can be costly and involved. However, if a patent can protect your product then you should begin this process as soon as possible.
A patent can only be applied to a unique idea, way of doing something or aspect of design. If you’re not sure if your business or products would qualify for patent protection then get in touch for preliminary patent advice. This is something I offer as part of my Intellectual Property Law Package for small businesses and I can save you from making any costly mistakes, wasting time or overlooking something which could be patented and would grant you full robust ownership over your design.
Website Legal Checklist - Privacy Policies and Cookie Consent
Much of our compliance needs to be done or available to view online. Your website needs to satisfy data protection laws and be a safe and secure place for users, especially if you’re asking them to share any personal details or are tracking them in any way online.
Cookies are a way of tracking website visitors, which sounds more intrusive than it usually is. Most websites only use session cookies. These only follow users who are on your website and the information can be used to build useful data for you, such as how many visitors you have, which pages they’re spending time on and how many are completing a call to action. This information can be used to improve your user’s experience online and help you to see where your traffic is coming from.
Third-party cookies are more controversial. In fact, they may soon be banned. These follow web users far more closely, not just on your website. Therefore, you need to let website visitors know which cookies you’re using and what you’re doing with the information and data you collect. Total transparency is key, which is why the cookie consent banner was made mandatory, though the UK may soon choose to become exempt from this. A cookie policy is where you declare to your users, what cookies you collect, how and for what purpose.
Your privacy policy is an expansion of this and may even incorporate your cookie policy if your cookie policy is fairly basic. A privacy policy is used to let website visitors know how you plan to protect their privacy and safeguard any information they share with you. Every website needs a privacy policy but it will be especially important if you are processing payments or bookings on your website and especially if you have members-only area. Basic privacy policies are available but I would recommend having a lawyer help you draw up a privacy policy for your website if you’re selling or taking bookings. Not only should this give you a more tailored agreement but they will also be able to explain to you what is in the agreement and therefore what your responsibilities are in regards to this.
No website should launch without these agreements ready for users to view should they wish to.
If you need contracts drawn up for your website then you might find it more affordable to book my Start-Up Package. However, if your business takes place mostly online then my E-Commerce Package might be more robust as this includes:
Website legal audits/advice on website updates required to ensure legal compliance.
Website terms and conditions.
Privacy Policy and required customer notifications on your site where personal data is collected.
Cookie Policy and Cookie pop-up notice requirements.
Website information requirements.
Sale of online goods/services terms and conditions.
Copyright legends and advice on content protection.
Online Membership - legal advice and required documentation.
Terms And Conditions
Terms and conditions are arguably the most important and sacred document a business owner owns. It can dictate how you do business, what you require to do this, what you provide, limits on your liability, protection of your content and other intellectual property rights, how much and how you are paid for your goods and/or services, amongst many other things. It may also include your copyright stipulations which are particularly important if you’re creating original work for another company and a cancellation policy which can be used to protect businesses providing services to clients. If you are dealing with consumers then there are very specific rules about what needs to be included in your T&Cs and how the terms should be worded - plain language is key here!
Your terms and conditions are very important and they’re also very bespoke so I strongly recommend working with a commercial solicitor to draft T&Cs that are right for your business and that you fully understand, since you may have to answer questions about them.
Legal Support For Start-Ups
Aubergine Legal specialises in drafting agreements, offering legal advice and supporting start-up businesses in all they need to ensure they are compliant. We have a number of services and some packages with multiple services designed to offer everything you need in a more affordable and simplified bundle. I also have a free downloadable checklist for start-ups which you can use as a work-through when setting up your business. Check out our legal support services for start-up businesses and get in touch if you have any questions.